Whether you’re mired in personal, medical or business debt, the United States Constitution and Federal Law make provisions for a fresh start. Bankruptcy filing without an attorney is fraught with pitfalls and is not recommended.
The easiest, fastest and least expensive bankruptcy is Chapter 7, in which you list your creditors and discharge their claims. There are exceptions, but for the average person these don’t apply.
The court fee to file for Chapter 7 bankruptcy is $335. If you own no real estate and have not been in business the past 10 years, you are probably eligible for the lowest entry level attorney’s fee. Answering "No" to the questions below means you likely qualify to walk away debt free.
• Do you owe government guaranteed student loans?
• Do you have unfiled income tax returns?
• Have you laundered money or hidden cash?
• Do you owe money as a result of a fraud you committed?
• Have you hidden or transferred assets, including real estate, to avoid creditors?
• Is your household income much higher than the average family’s household income?
• Do you owe sales taxes, payroll taxes, or tobacco or alcohol taxes?
• Have you put money in someone else’s name to hold or hide for you?
Chapter 13 bankruptcy is for those who earn too much or have too many assets for a straight discharge of debt. You file your declaration of assets, income and debts, and then propose a form of [court supervised] repayment plan (three to five years). The purpose is to pay enough money against your debts to keep your assets (such as a home for most people) or allocate enough income to creditors for discharge.
This plan may not work for clients with significant assets and no income to qualify. For example, Chapter 13 is not advisable for a married couple with $100,000 in equity who are not able to keep their mortgage current or pay off mortgage arrearages within five years. The most difficult part of filing for Chapter 13 protection is keeping your job long enough to complete the repayment plan.